The Trump administration is investigating whether Chinese artificial intelligence companies stole US technology through illicit model distillation and may impose financial sanctions, Treasury Secretary Scott Bessent said.
Bessent told Fox Business that frontier AI firms including Anthropic and OpenAI face intellectual property theft from Chinese competitors that distill their products. He said watermarks from American large language models were found embedded in Chinese systems. Companies such as Moonshot AI, DeepSeek, MiniMax, and Alibaba are on the administration's list of suspected offenders, and Washington could apply Specially Designated Nationals sanctions if theft is confirmed.
The probe follows the release of Moonshot AI's Kimi K3 model, which boasts 2.8 trillion parameters and outperforms OpenAI and Anthropic in some benchmarks, triggering sell-offs among Wall Street semiconductor firms. Separately, Anthropic accused Alibaba of launching its largest distillation attack. The two governments plan to hold AI talks in September.